Taxation

Generalities

The Romanian tax law is very comprehensive and there are a number of legal regulations and exceptions in this area.
We present a brief summary of the most important information here.
A complete presentation would go beyond the scope of this website.
We are at your disposal for further specific questions in this area.

Profit tax: Flat rate of 10% from 01.01.2018

This low tax rate has made Romania a very attractive location.
Applies to all legal entities. According to Romanian law, partnerships also apply
as a legal person.

Exception: MICRO COMPANIES

According to the amendments that came into effect on February 1, 2017 and the Urgent Ordinance No. 79/2017, a company is to be classified as a small company (micro company) if it meets the following criteria as of December 31 of the previous year:

a) It generates income that does not come from banking, insurance, capital, or sweepstakes

b) The income is less than 1,000,000 euros. If this mark is exceeded, the companies lose this status and are treated for tax purposes like all other companies and the above-mentioned automatically 10% profit tax applied.

d) Share capital is not state-owned or does not belong to the municipalities

Important: This tax is also levied on micro companies if the company has losses!

NEW 2015: in the event of a start-up, a company is classified as a micro company by default, except for companies with a share capital of greater than or equal to EUR 25,000. They can choose between the two variants themselves.

NEW 2016: The micro-company tax of this type of company is determined as follows:

1% of sales for companies with one or more employees
3% of sales for companies without employees

If the number of employees changes in the course of the financial year, the tax is adjusted quarterly accordingly.

Income tax: flat rate of 10%

As of 01/01/2018, income tax is only 10% instead of 16%.
This affects the following types of income:

Income from self-employment
Salaries and similar income
Capital investment income (excluding dividends that continue to be 5%
be taxed)
Rental income
Income from agriculture and forestry, fisheries
Bonuses
Pensions

When calculating income tax for income from employment
(Income tax) the taxable income is calculated as follows:
Taxable income = gross income minus social security contributions
Allowances.
Exemptions are possible in the case of a main job if the gross salary is less than 3,600
Lei / month is and will depend on the number of people (spouses, children,
Relatives up to II degrees) living in the household and a monthly income of less than 510 lei
have calculated.
According to the Urgent Ordinance O.U.G no.79 / 2017: 510 lei to 1,310 lei per month.
No allowances are possible for income from secondary employment.

Important: from 2018 the above Types of income for private individuals subject to health insurance contributions if they exceed the measured value of 22,800 Lei. In this case, a flat rate of 2,800 lei (10%) is payable as a health insurance contribution.
The measured value of 22,800 lei corresponds to 12 monthly minimum wages and can increase if the minimum wage is subsequently increased.

Important: In this case, private individuals must submit a declaration (Form 600) for the previous year to the tax office by January 31 of the year.

Dividend tax

The dividends that a Romanian company receives as a result of an investment in a Romanian company are completely tax-free. The condition that a participation of at least 10% exists for at least 1 year was removed.

The dividends that a foreign company receives as a result of an investment in a Romanian company are taxed at 5% at source.
If the following conditions are met at the same time, dividend payments will not be taxed in Romania:

the dividend recipient is located in an EU country (certificate of residence required)

the recipient of the dividend is also taxable in the EU country

the recipient of the dividend is not tax-exempt in the EU country

the dividend recipient has owned at least 10% of the capital of the Romanian company for at least 1 year.

The taxation of dividends paid to private individuals will decrease from 16% to 5% from 2016.

Important: from 2018, this income is subject to health insurance contributions for private individuals!

If the dividend income exceeds 26,760 lei, a flat rate of 2,800 lei (10%) is paid as health insurance contribution.The measured value of 2,760 corresponds to 12 monthly minimum wages (2230Lei x 12) and can increase if the minimum wage is subsequently increased.

Individuals who have dividend income must submit an income tax return to the tax office.